Cape Town - South African national oil company PetroSA said
on Monday it had partnered with China’s Sinopec Group to push along the
building of its Coega refinery, originally slated to cost $9-$10bn and produce
400 000 barrels a day.
The Mthombo project, in the industrial port of Coega near
Port Elizabeth, has been in the pipeline for
several years but progress has stalled mainly because of a lack of funding.
"The agreement defines the process by which PetroSA and
Sinopec will shape the business case for Project Mthombo, the initiative to
construct a world class crude oil refinery at Port Elizabeth’s Coega Industrial
Development Zone," PetroSA said.
The first phase of the agreement will focus on building a
business case for the plant, and the second will consider engineering and
design, it added.
Sinopec, China's second-largest oil and gas producer, is
expected to complete both studies over the next 18 months.
China has set aside $20bn to invest in South Africa’s energy
sector as part of its growing presence on the continent.
Two years ago, acting PetroSA chairperson Linda Makatini told
Reuters the firm was in talks with Sinopec and was looking to sell an equity
stake of up to 30% in the refinery, which will be among the largest in
sub-Saharan Africa.
Papers seen by Reuters suggest PetroSA is trimming the
originally planned capacity of the plant to reflect domestic demand and
possibly to reduce its price tag.
South Africa is a net importer of crude, most of it from
Iran and Saudi Arabia.